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Pay rise now paying more tax??

  • 27-10-2010 2:29pm
    #1
    anamcarame
    Closed Accounts Posts: 139 ✭✭


    Hi. I am a bit confused and not sure if this is correct as it seems unfair to me. I have just moved up from .5 to .6 of the incremental scale and now I am paying twenty odd euro more a week in employee prsi. Surely this can't be right. Why would I be penalised for earning more? I was better off earning less??? So why shouldn't I just ask for a pay decrease? lol! Any ideas if this could be right.


Comments

  • #2
    nompere
    Registered Users, Registered Users 2 Posts: 1,678 ✭✭✭nompere


    You can find the tables of PRSI here - http://www.welfare.ie/EN/Publications/Advanced2010/Pages/anprsi2010.aspx

    If you earn (say) €350 per week then you don't pay employee PRSI. If you earn €353 then you pay 4% on all of it. PRSI doesn't work in the same way as PAYE where only the excess over a threshold is taxed.

    You are right that you might be better off with a pay cut.


  • #3
    namenotavailablE
    Registered Users, Registered Users 2 Posts: 59,702 ✭✭✭✭namenotavailablE


    It could be because of the Health Levy rules.

    Basically, if you were earning 'reckonable pay' (i.e. after all pension deductions) of under 500 per week prior to the pay-rise, you were exempt from paying the Health Levy.
    Once your reckonable pay goes over 500 pw you pay the Health Levy on ALL of your pay.

    That catches people who go just above 500 pw (or 26000 pa)- it's potentially an issue for reckonable pay up to approx 27500 pa.

    If you want, you can check your calculations using my tax calculator available here

    Your best option is to probably start paying into a pension scheme to bring your reckonable pay to 500 pw. It will avoid the Health Levy and create a long term asset for you

    Free Excel net pay calculator- https://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm



  • #4
    ali85
    Registered Users, Registered Users 2 Posts: 526 ✭✭✭ali85


    anamcarame wrote: »
    Hi. I am a bit confused and not sure if this is correct as it seems unfair to me. I have just moved up from .5 to .6 of the incremental scale and now I am paying twenty odd euro more a week in employee prsi. Surely this can't be right. Why would I be penalised for earning more? I was better off earning less??? So why shouldn't I just ask for a pay decrease? lol! Any ideas if this could be right.

    This exact same thing happened me in July. I rang the SW and they told me to get onto salaries sections, salaries told me to get onto SW. I should have been earning about €20/30 more per fortnight, yet I ended up LOSING €55.

    Thanks to the posters because I had no idea at the time what was going on.


  • #5
    legend365
    Closed Accounts Posts: 460 ✭✭legend365


    Hi, I was just wondering could anyone clarify my situation.

    I earn from 200 - 500 a week but my pay for the year stays under 352 a week (below 18304).
    The threshold for employee PRSI remains at €352 a week.

    Should i be paying PRSI for the year or should i get it back?


  • #6
    2moreMinutes
    Registered Users, Registered Users 2 Posts: 1,003 ✭✭✭2moreMinutes


    legend365 wrote: »
    Hi, I was just wondering could anyone clarify my situation.

    I earn from 200 - 500 a week but my pay for the year stays under 352 a week (below 18304).


    Should i be paying PRSI for the year or should i get it back?
    PRSI is calculated on a Week 1 basis, i.e., your liability to PRSI is worked out on how much you earn in any specific week/pay period and not worked back on an average basis over the full year.


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